tv On the Money With Maria Bartiromo NBC May 19, 2013 2:30am-3:00am EDT
breather on thursday, the worst day in almost two weeks. but they rebounded again on friday. still, some big earnings news this week. walmart, for example, missed analysts' expectations, but macy's came in ahead. john deere beat predictions though its outlook was weak. cisco came in ahead of expectations. ceo and chairman john chambers calling ate strong quarter. >> it's our ninth consecutive record quarter in terms of revenues, and our sixth record quarter in terms of profits growing faster than revenues. good balance across the board. the u.s. is actually looking pretty solid in terms of growth, and that's a good thing for the economy. but also the emerging markets did very, very well for us. >> cisco's ostock was up nearly 15% on the news. encouraging news about america's deficit. the congressional budget office changed its predictions and says the deficit is now expected to shrink to $642 billion in the fiscal year ending in september. that's down from an earlier
estimate of $845 billion in deficit. the change due to the strengthening economy, with greater than expected tax revenues and payments from mortgage giants fannie mae and freddie mac. retail sales rose unexpectedly as well for the month of april, climbing a tenth of a percent. analysts were expecting a decline of 0.3%. that's a sign of consumer strength, important because consumption makes up about 70% of the u.s. economy. the market sets new highs on almost a daily basis, but are we ripe for a corrtion? a lot of skeptics out there. what about that pesky federal reserve and what happen hence the easy money comes to an end? we're talk about how to invest right now with alison deans, senior adviser of varick asset management and richard bernstein of richard bernstein associates. good to see both of you. thank you for joining us. what about the record performance? milestones almost every single day. do you think that leads one to believe that we are topsy-turvy, that we're going to turn around and go down soon or would you put new money to work here?
>> i would put new money to work, maria. i think we're in the stage of the bull market where people are just beginning to realize that there is actually a bull market going on. when you consider it's more than four years old, and people are still extremely skeptical, that's understandable. but i think we're getting to the point where people are finally accepting that there might actually be a bull market. >> and of course that bull market really fueled initially by the federal reserve. but alison, do you agree with that? and what about the fundamental backdrop? how has earnings season been. >> well, that's my issue which is the market no longer holds the same values to hold and earnings momentum is really slowing down. earnings growth is pretty tepid and top line growth is relatively weak. i look at that and think we've had such an incredible run in the market. the values aren't there to the same degree that they used to be and now we have earnings challenge, at least for the next several quarters. thing is a risk that the market can pull back or go sideways for a while. >> what kind of pullback might you expect? how significant? >> not too significant. 5%. when you look at the other classes, this is still one of
the better places to be. i just think the market has gotten a bit ahead of itself. we need to see the improvements going on globally and in the u.s. economy translate into better earnings before i can see the market going higher. >> you make great points. at some point, the federal reserve is going to slow down. >> yes. >> in terms of the $85 billion in bonds that they're buying every month. does that become the catalyst for a sell-off? >> well, i think, maria, historically, the fed has always lagged the markets. the markets are much more forward looking than the fed. even because the politics surrounding the fed, the fed is always kind of a lagging indicator. the fed has told investigators that they're going to be late in this cycle. they're admitting they're going to be late. so i think it will be later than normal in this cycle. what that means is i think by the time the fed actually starts reversing quantitative easing and starts tightening monetary policy, people are going to wonder why didn't they do it already? the markets will be so far ahead of the fed at this point. >> what is the problem with the economy right now? we should be seeing much better
growth numbers, right, alison? it's very much tepid. >> part of that is we had decades of leveraging up as a society. our government leveraged up. households leveraged up. as a matter of fact, the only blessing in this whole weak period is that corporate america hasn't leveraged up. so we're now at the point where households are back at a strong, rationale position. the government still has deleveraging to do. i think as you're going through deleveraging and getting back to a more normal environment, it's a multi-year process, a very slow economic growth. the good news is we're pretty much at the bottom point in the deleveraging with you can start to see pickup. but before consumers start releverage after what they have lived through, you need to see them feeling better about the job environment. and we're only starting to see the numbers coming out of employment that make people feel as if they're is hope that their wages will go up and there is possibility for employment. until that happens, i think you really need -- you're going to see very slow economic growth. because without consumer spending being very robust, it's hard to have strong economic
growth. >> and yet i want sometimes like people don't care in terms of invest in the stock market there is is the buy on the dip mentality. even if you're right where we could see a 5% sell-off, do you think buyers will be there and then it goes back up again? >> possibly. i've not seen this kind of market behavior since post-1987. you know, since 2000, the internet bubble bursting, people tended to sell on rallies. and this is the first time in a very long time people are buying on bad news, good news. to some degree short-term it makes menervous. but it's people are way underexposed to equities. >> we have the sequester. no real impact there, and certainly no impact from the investor. the debt ceiling debate coming up. what is your take on some of the other catalysts that could be a negative for the market? >> well, they can. that can be short-term negatives. washington unfortunately can be a huge distraction to investors. i think the important thing gets back to really what alison was talking about before. how do the events in washington affect earnings. and if earnings growth recovers and we start to see a return to
earnings growth, and washington doesn't disrupt that, i think that's what people should focus on, is washington going to affect the profits rebound, if they don't, i think the markets will be okay. >> what do you want to be doing with your money right now, alison? >> i think sitting tight. and if there is a pullback in the market, putting more money in equities. >> what sectors do you like best? >> i would say the overdone trade to me has been the income-oriented, the multinational dividend yields. i would look to domestically oriented more driven by domestic growth and probably smaller and mid cap. >> that's what you said too. >> exactly. there is a lot said about the rotation from bonds to stocks. i think the great rotation is going to be non-u.s. to u.s. and therefore, again, as alison said you want to look at domestically-focused companies. we particularly like small and mid cap industrial companies. these companies are actually gaining market share versus the competition around the world. >> we'll leave there it. great to see you both. richard bernstein, alison deans, joining us. up next "on the money," responsibility in corporate america today.
i talk to a former investment banker who says what is good for the planet is good for business. and later, the a-list hollywood star making waves by getting to work in the beauty industry. so you've got all of these titles -- actress, producer, director, business owner, co-owner. >> hairdresser. >> hairdresser.
welcome back. as leadership from wall street to washington faces increased questions about trust, let's look at the role that responsibility to others, to the larger world play in a sound strategy. my next guest went from making green at goldman sachs to going green. mark tercek is ceo of the nature conservancy and author of "nature's fortune." good to have you on the program. >> it's great to be here, maria. >> really an interesting resume you have. you spend 25 years on wall street before taking the helm of the world's largest largest conservation organization. what are you trying to do?
>> at the nature conservancy, our mission is to save the lands and waters that land depends on. it's kind of hard to be against that. the question is how can we get done more, faster. so at the nature conservancy and in my book, we are arguing you can think of nature as an investment opportunity, natural capital. if you think about it that way, it's really the smartest investment we can make there are a lot of win-win opportunities, and we're trying to get government, business, you know, more of society on the side of environmentalists for practical reasons. >> so make the case. how does it improve the bottom line? >> well, take a company like dow chemical. they're one of our partners. andrew is our partner, smart guy. he knows me. he said mark let's tackle this together. let's take dow scientists and tnc -- i'm sorry, tnc scientists and dow engineers, put them together and see how dow depends on nature and what they can do to protect it. for example, dow's big plant in freeport, texas, is right on the coast. so of course dow is concerned about storms and sea level rise. and so their first plan would have been to build seawalls to
protect against storms. now together we're looking at investing in coastal ecosystems, a lower cost, likely lower cost and more resilient form of defense. but if dow invests in these coastal ecosystems, there are a whole bunch of environmental cobenefit. >> and then you have one major mistake that totally changes the perception of business, of -- like the bp oil spen in 2010, took a terrible toll on the company's reputation on the idea that you could actually be drilling deep water safely. >> right. >> mistakes will happen. >> mistakes will happen. we all have to be kind of humble. environmentalists will make a mistake, business will, the government will too. and by the way, there are also bad actors out there. we're not naive. well get the idea there is a need to keep an eye on business. but there is huge untapped opportunity to pursue these win-wins, a more collaborative approach to protecting nature. >> give me your take on the top couple of most worrisome issues
toward nature right now. >> a couple come to mind right off the bat. here at home in the u.s., we need to rebuild bipartisan support for the environment. we've kind of lost that. we need a strong government partner. water issues loom large too. but in water, there is a lot of progress. the business sector gets their dependence on water. so companies, beverage companies like coca-cola, pepsi are really being good partners of ours in investing watersheds, protecting nature. >> so how do you balance the idea that, for example, america is rich in shale, is rich in natural gas, and fracking and drilling is a big topic of debate. do we capitalize on the fact that this company is rich in this commodity and produce it and drill for it and frac? or do we worry that it's going to get into the water supply? is there a way to do both? >> my point of view is it's not a black and white situation. some people like to simplify things. it's black and white, good, evil. i don't think that's the situation. on the one hand, there are very serious environmental issues to address in connection with
fracking, and it's a long list. there are aquifers, water there is what you do with the water that you use in fracking there is methane leakage issues there is all the disruption and habitat, you know, disarray that comes from fracking. we need a good plan to deal with all that. we're cautiously optimistic we can deal with that. on the other hand, done properly, natural gas is much cleaner than coal. so it's a short-term real boost on the climate change front. and obviously can be a great boost to our economy. and so at the nature conservancy we're saying how can we have both? for sure we have to be careful about the environmental risks. but with strong regulations can we manage our way forward to have the win-win again for business reasons and for environmental ones. >> i think the white house did come out with a report that said if done safely, it could be a huge boon. >> and we agree with that. >> yes. >> but we want to emphasize, the environmental risks can't be ignore order minimized. but likewise i think environmentalists should be wise about the enormous economic gains that can be achieved.
>> and the world agrees with you on nature, no doubt about it. mark, good to have you on the program. >> thank you, maria. >> thank you so much, mark tercek. up next, every move jennifer aniston makes is watched by hollywood and the press. i talk to the former "friends" star about life in a fish bowl, even a few beauty secrets. >> i
welcome back. do celebrity and science make one beautiful sales pitch? jennifer aniston hopes so. one of hollywood's highest paid actresses has invested in a hair care company, aiming to revolutionize what is in your shampoo. she tells me why she took on a new role at a startup. >> honestly, it's my gut. this was my gut. it's new, and we just want to do really good things for gals and their hair. >> years ago, the days of the rachel hair, and everybody copied your hairstyle, was that the beginning of jennifer aniston's hair obsession? >> it was. because this is kind of -- it's so humorous, because i have nothing but troubled hair. >> a-lister jennifer aniston is putting her famous locks to work as co-owner of living proof, a company hoping to stand out in the $10 billion a year hair care industry. >> this is a fun opportunity to enter into a business. and be a part of something that i think women really appreciate
to have healthy hair. and we're sold a lot of crap. >> jennifer kind of represents everything we stand for, beauty and brains, kind of that unique alchemy. and what makes us truly unique is the science behind us. >> the cambridge, massachusetts, company was founded by biotech investors polaris investors and mit's robert langer, recipient of the technology innovation. he holds more than 800 medical patents. >> i don't do the rachel haircut, no. living proof is highly focused on science. they have terrific scientists from harvard and m.i.t. and merck doing really cutting edge work. >> our science is truly advanced, and really creates products that solve beauty challenges that have never been solved before. >> and cure cancer. >> yes. >> why does a scientist who cures cancer go i'm going to help cure frizz? >> silicone is what is currently
used in pretty much every anti-frizz product. and we just took a much more fundamental look at it. and said, well, what causes frizz and what causes frizz is moisture. so either materials, polymers that can keep moisture out better than silicones. and when we did this, we came up with a totally different material all a polyester. >> we have patented molecules that can't be duplicated. we brought biotech material into the beauty industry that has never been done before. >> a lot of hair products have approached me in the past, and it sort of never -- it never seemed right. after the explanation of what is behind it, the science behind it, i got extremely excited. >> what is the ultimate end game here? i know you teamed up with polaris, the private equity firm. >> correct. >> which is a big investor here. are you hoping at some point to take this company public? >> sure. definitely that's absolutely an option. we're doing really well, now.
since jennifer joined, we're actually on track to double the business. so we have very big aspirations to grow this into one of the most respected and largest independent beauty companies. >> we have fun. we really do. >> where do you want to take this company when you say we have fun? what would you like to see change or develop? >> there is all sorts of things that women sort of struggle with. so it's finding out what those sort of weaknesses are, and then being able to create a solution that is actually going to last. >> this is a big deal for you. you have taken equity in this company you. could have done an endorsement situation, right? everybody wants you to endorse their products. but you decide here you're going have to an ownership. why? >> why not? because i love the company. i really do. and it's more interesting to be able to be creatively involved and in future products, and in the future of the company. it's just fun to be a part of --
it's a whole process. >> as opposed to just acting in one. >> you get questions all the time about your personal life. how tough is that living in a fish bowl all the time? >> you know, it's an odd part of the business, you know. it's what you signed up for. >> well, i don't think i did. i didn't quite understand that that was going to -- i would have been thrilled to just get an off broadway play, no, a commercial. i couldn't get hired for a commercial. >> really? >> you know, you kind of -- you don't really know what it is until you're in and it and all of the sudden that's happening to you. >> do you have to say look, it just doesn't matter? are you at that point? >> you have to. i'm still not at that point. >> it's hard? >> there is a lot of negativity in the world. and there is a lot of positivity in the world. so you have to sort of embrace the beauty and the goodness in people, and just try to ignore the other stuff, although the phone when it rings off the hook because somebody is pregnant again or somebody is getting
married, it's got to be tough. >> everybody is trying to guess what happened and nothing happened. >> so you have all of these titles -- actress, producer, director, business owner, co-owner -- >> hairdresser. >> hairdresser. so who is jennifer aniston? >> oh, just tired. >> my thanks to jennifer aniston. up next, a look at the news this upcoming week that will have an impact "on the money." and while most people can't make it through the day without their cup of coffee, one person is paying more than half a million dollars for his java jolt. find out why next. as we take a break, take a look at how the stock market ended the week. back in a moment.
for more on our show and our guests, check out the website, otm.cnbc.com. i hope you'll follow me on twitter and on google, plus look for @mariabartiromo. here is a look at the news that may move the markets and impact your money. home depot, hp, target and sears. on monday, united continental will begin flying the 787 dreamliner once again. and on tuesday, microsoft is set to debut the next generation xbox. on wednesday ben bernanke will testify on the central bank's
economic outlook before congress. that same day, the fomc minutes from its meeting earlier this month will be released. also on wednesday, existing home sales figures come out for the month of april. the new home sales figures will also follow on thursday. and finally today, that cup of joe keeps getting more and more expensive. but it is worth more than half a million dollars? it was to one anonymous bidder who paid $610,000 to have a coffee date with apple ceo tim cook at the company headquarters. charity buzz, which helps nonprofits raise donations, kicked off the auction back in april with a starting bid of $50,000. the majority of the proceeds will benefit the robert f. kennedy center for justice and human rights that will do it for us today. thank you so much for being with me. next week, graduation time for the class of 2013. what freshly minted mbas think about the job market and where they will find success. it may surprise you. each week keep it right here where we are, "on the money."
and we get inspired that a designer show house. we are trying a sleek and cozy beach house in malibu. >> we found this whole factory carved in an antique shop and turned it into a mirror. organicntemporary and at the same time. >> welcome to open house. we are in a stunning town house on the upper east side. bathrooms,s, seven and a spectacular wine cellar. and with a huge open shaft kitchen, it is perfect for entertaining. let's kicking off on the west coast. lauren gives us a tour of the malibu home where the contemporary design, with custom pieces created the perfect beach house.